Data center water, power needs strain rural communities
Jeniffer Solis
(Nevada Current) Northern Nevada has attracted investments from several tech companies looking to expand their data infrastructure, and while many of those data centers are located in and around Reno, tech companies are starting to branch out.
Last summer the Lyon County Planning Commission unanimously voted to approve a plan that would rezone more than 500 acres of agricultural land to accommodate a massive data center complex in the Mason Valley about 10 miles north of Yerington.
If built, the 14-building complex would require 1,000 megawatts of power – or enough electricity to power roughly 500,000 homes. The amount of water the data center complex would need is less clear.
That’s a concern for local residents because Mason Valley is one of the state’s most overtapped groundwater basins, where farmers already face potential water cuts following a decades-long decline in groundwater.
“There is this perception that the good old boys club is getting together. The zoning is getting passed really fast, there’s no environmental assessments, and long term feasibility and community impacts are not being addressed,” said Staci Emm, a Mason Valley rancher and professor at the University of Nevada, Reno Extension.
The rapid growth of data centers across Nevada, and their enormous energy and water demands, took center stage at the annual Nevada Water Resources Association conference last week.
Rapid growth also means data centers need large plots of available and scalable land, leading tech companies and data center developers to eye rural landscapes.
Jeremy Smith, the director of the Truckee Meadows Regional Planning Agency, said the agency has been involved in more and more regional land use changes to accommodate data centers.
“We’ve just gone through a pretty significant land use change process for a large area up in the north part of Reno that probably will have a few data centers as it moved from a residential Master Plan land use to industrial,” Smith said during a panel on data centers.
However, the rapid development of data centers is forcing regional planners to develop long-term plans for land use on the fly. The task has been a challenge for Truckee Meadows Regional Planning Agency, which has limited staff, Smith said.
“We don’t necessarily have the capacity. We have six people that work in the agency,” Smith said.
There are currently no state or county-wide regulations in Nevada guiding where data centers can and can’t be built. Smith said it will have to be on local governments to create more targeted policy interventions to manage the impacts of data centers, including creating zoning specifically for data centers.
Machine learning models like ChatGPT require massive computational power. Cooling the power-hungry facilities that help train and run those models requires vast amounts of water.
Much of Nevada has suffered through severe drought conditions for years. More than half of the state’s groundwater basins are already “over-appropriated,” meaning farmers and communities are drawing down groundwater reservoirs faster than they can be refilled.
Despite the lack of water in Nevada, there are several benefits that have attracted developers to build in the driest state in the union.
Nevada has vast tracks of unoccupied land for scalable developments, low risk of natural disasters, and a proximity to California tech hubs like Silicon Valley. Nevada also has lower operational costs compared to neighboring states and a favorable tax environment, including abatements of up to 75% on property tax for a decade or two.
“Nevada in general, has low natural disasters… and they have the right policy makers in place from the economic standpoint,” said Alise Porto, the senior vice president of energy and sustainability at Switch, during a panel discussion.
The Tahoe Reno Industrial Center, a business park in Northern Nevada bigger than the city of Reno, has already attracted investment from Switch, Tract, EdgeCore, Novva, Vantage, and PowerHouse.
Erik Henzl, a staff research scientist at the Desert Research Institute, estimated that by 2033, electricity generation for data centers at the center could require nearly 12,450 acre-feet of water annually, while direct cooling could require about 9,600 acre feet annually.
The Tahoe-Reno Industrial Center General Improvement District — which provides sewer and water services for the business park — holds rights to more than 4 billion gallons a year, including groundwater and surface water from the Truckee River.
Shari Whalen, the general manager for the water utility provider, said the district ensures water resources are managed carefully and that data centers are approved with water availability in mind.
“We’re being careful with what projects we’re approving. We’re making sure that customers have the water resources before they’re breaking ground, and that we have a plan for how we’re going to provide water. And the plan is not to take all the water there is in the Truckee River,” Whalen said during a panel discussion at the conference.
Whalen emphasized that data center water consumption varies significantly based on cooling technology. Evaporative or wet cooling require substantial amounts of water, while closed-loop direct liquid cooling and air-based cooling systems use a lot less water.
“We’ve got real customers hooked up that we’re providing water to. And I’ll tell you, some of them need a half an acre foot of water for their building,” Whalen said.
“It really depends on the company and what their access to water resources are and what types of cooling technology they choose to deploy,” she said.
Data centers’ need for massive amounts of power is another factor states utility regulators must contend with.
The U.S. Department of Energy projects that data centers could consume between 6.7 and 12% of total U.S. electricity by 2028, up from 4.4% in 2023. That growth will require new power generation.
Jeff Brigger, the director of business development at NV Energy, said more and more developers are requesting massive energy loads to serve future data centers.
“Nowadays we’re getting customers that come to us and they’re asking for loads upwards to 1,000 or 2,000 megawatts. To put that in perspective, our entire Northern Nevada service territory is only about 2,500 megawatts,” Brigger said.
Despite the water and power challenges data centers present, they could create an economic opportunity for rural agricultural communities, said Bryan Masini, a Nevada farmer and rancher in the Mason Valley.
The proposed Monarch Data Center in Lyon County’s Mason Valley, by Copia Power Devco LLC, is expected to generate $16 million in state sales tax for the State of Nevada and $8 million for local governments during construction. Once complete, operations are expected to generate around $562,000 in annual property taxes.
During a panel on data centers at the Water Resources Association Conference, Masini said rural farming communities in Nevada have few options when it comes to economic development. Those strains are even more pronounced in communities that are running out of water like Mason Valley.
“I don’t know a darn thing about AI, but what I do understand is the economics of Mason Valley. It used to be the diamond in Lyon County, and through the years, we’ve gone down and down and down,” Masini said. “We lost our golf course. We have a real problem with our hospitals. We have a social-economic problem in our area. And so in the big picture, we do need some diversification.”
Whether data centers are the diversification water challenged agricultural communities need, is the question, said Masini,
“If people are going hungry, are we going to feed them first, or are we going to do their entertainment first? That gets us started,” Masini said. “It’s a puzzle. We’re trying to put it together.”